Wednesday, 19 June 2024 04:40

Chips maker Nvidia rises to world’s most valuable company

Rate this item
(0 votes)

Nvidia has become the world’s most valuable company following a staggering rally in its shares, underlining the outsized role investors expect artificial intelligence to play in the global economy over coming years.

Nvidia shares rose 3.5% on Tuesday, giving it a market value of about $3.34 trillion. That pushed the semiconductor bellwether past Microsoft and Apple, which had been jostling for the top spots in recent days.

The surge in Nvidia's market value has been driven by demand for its chips, which are the gold standard in the AI space. The company's shares are up more than 170% this year and have risen about 1,100% since their October 2022 low.

Blockbuster earnings and broadening investor enthusiasm over AI are supercharging Nvidia's rally. That fervor has been reflected in Nvidia’s market value, which took only 96 days to go from $2 trillion to $3 trillion.

Microsoft, one of the two other companies to reach those rarefied levels, took 945 days to go from $2 trillion to $3 trillion while Apple took 1,044 days to make the leap, according to Bespoke Investment Group.

Previously, just 11 U.S. companies since 1925 have reached the top spot in market value on a closing basis, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

Fortunes have diverged for past holders of the top position in recent decades. Microsoft reached No. 1 in the late 1990s but then its shares struggled for years during the early 2000s following the dotcom bubble, only to come roaring back in the latter half of the last decade.

Exxon Mobil became the world’s most valuable company in the 2000s but its shares retreated following a downturn in oil prices.

To some, Cisco is the cautionary tale. The company’s shares peaked at over $80 in March 2000 in the midst of the dotcom boom, during which investors often assigned dizzying valuations to internet-related companies.

Bespoke’s analysts recently contrasted the trajectories of Nvidia and Cisco, whose products were seen as essential in supporting the internet's infrastructure.

"NVDA's run has been incredible, but it will need to keep growing from here and stave off competition if its stock is going to keep putting up stellar returns," Bespoke said in a recent note.

For now, Nvidia’s earnings are supporting its stock price. Revenue more than tripled to $26 billion in the latest quarter, while net income jumped seven-fold to $14.9 billion.

Revenue for the current fiscal year is expected to roughly double to $120 billion, and then rise another 33% in fiscal 2026, to $160 billion, according to LSEG data.

Nvidia's impressive financial performance and forecasts have led its stock valuation, by some measures, to moderate despite the surge in its share price.

For example, Nvidia's forward price-to-earnings ratio last stood at 43, according to LSEG Datastream. That is higher than the 25 level it stood at to start the year but below levels it reached for much of last year. By contrast, the S&P 500 trades at 21 times earnings.

While Nvidia has been the standout performer, it is not the only stock to benefit from enthusiasm about the profit potential for AI. Shares of other technology companies, including Super Micro Computer and Arm Holdings , have also risen sharply this year.

 

Reuters

July 20, 2024

Dangote’s quest for import ban on diesel bad for Nigeria’s energy security, competition, FG says

Aliko Dangote has asked Nigeria to suspend imports of diesel and aviation fuel in a…
July 19, 2024

LG autonomy is guise for state capture, overtaxation - Afenifere

PRESS RELEASE Afenifere has stated that President Bola Tinubu administration's push for Local Government Autonomy…
July 20, 2024

Married men are revealing the ‘hardest parts’ of marriage that no one talks about

We recently asked married men of the BuzzFeed Community to tell us the hardest parts…
July 20, 2024

Husband uses drone to catch wife cheating on him with her boss

A Chinese man reportedly caught his wife cheating with her boss during work hours by…
July 16, 2024

Driver, 18 passengers abducted on Akwa Ibom highway

The driver and 18 passengers of a Port Harcourt-bound Akwa Ibom State Transport Corporation bus…
July 20, 2024

Here’s the latest as Israel-Hamas war enters Day 288

Top UN court says Israel's occupation of Palestinian territories illegal The United Nations' highest court…
June 19, 2024

Chips maker Nvidia rises to world’s most valuable company

Nvidia has become the world’s most valuable company following a staggering rally in its shares,…
June 18, 2024

Amusan secures fourth straight national title in 100m hurdles

Tobi Amusan has claimed her fourth consecutive national title in the women’s 100 metres hurdles…

NEWSSCROLL TEAM: 'Sina Kawonise: Publisher/Editor-in-Chief; Prof Wale Are Olaitan: Editorial Consultant; Femi Kawonise: Head, Production & Administration; Afolabi Ajibola: IT Manager;
Contact Us: [email protected] Tel/WhatsApp: +234 811 395 4049

Copyright © 2015 - 2024 NewsScroll. All rights reserved.